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Applying Mr. Mugabe’s Recipe

November 30th, 2008 by Viv

The Government caused the boom by increasing the money supply. They increase the money supply to pay their bills rather than tax the public directly. Nevertheless it is a hidden tax. Their excesses of monetary expansion cause a so called boom.

The boom induces entrepreneurs to initiate investments which, if the money was reduced to its original stable value would show losses, not profits.

And in any case if this exercise did reveal profits, they would be illusory, as in fact, reduced to its original stable worth, capital consumption would be seen to be occurring.

Now that the bust has occurred, the government is endeavouring to stimulate the economy with more of the same policy that caused the problem in the first place.

Many writers and commentators are complimenting the Government on its “wise” move. Some eminent commentators saying that it is not enough, and much more is needed. In so doing, they are exhibiting their abysmal ignorance of monetary theory.

Some wise local and international investors who have had the wisdom and the capacity to do so, have been and are buying gold. So much so, that the Perth Mint, working 24 hours a day seven days a week has had to close its doors to the public, until it catches up with back orders. They announced that buyers have made purchases from one ounce to 33,000 ounces.

Some interviewed investors say that, they are not really interested in profits, but capital protection. Wise people indeed.

Ronald Kitching

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